What should be the final year of AT&T’s WarnerMedia ownership concluded in December 2021. The fourth quarter itself was a strong one for the entertainment segment, with WarnerMedia drawing $9.9 billion in revenue, which was up 15.4%. That’s good news for Discovery, which will soon be merging with WarnerMedia pending regulatory approval.
WarnerMedia’s direct-to-consumer subscription revenues rose 11.5% in the fourth quarter. Overall, subscription revenues were up 5.4%. Thank HBO Max for both of those stats.
In other good news — for AT&T shareholders — AT&T topped media analysts’ Q4 estimates at both the top and bottom lines.
Wall Street forecast Q4 earnings per share (EPS) of 76 cents on $40.43 billion in revenue, according to a consensus compiled by Yahoo Finance. On Wednesday, AT&T reported adjusted EPS of 78 cents on $41 billion in revenue.
Overall, AT&T revenues declined just over 10%.
WarnerMedia ad sales sunk nearly 13% in the fourth quarter of 2021 without the election advertising spend that continued into November 2020. Operating expenses soared 38% on higher marketing costs and content spend.
“A year and a half ago, we began simplifying our business to reposition AT&T for growth and we’re extremely pleased with how we’ve executed on that commitment,” John Stankey, AT&T CEO, said in a statement accompanying his company’s financials. “We ended 2021 the way we started it – by growing our customer relationships, running our operations more effectively and efficiently, and sharpening our focus. Our momentum is strong and we’re confident there is more opportunity to continue to grow our customer base and drive costs from the business.
“We’re at the dawn of a new age of connectivity,” he continued. “Our focus now is to be America’s best connectivity provider and also ensure our media assets are positioned to grow and truly become a global media distribution leader. Once we do this, we’ll unlock the true value of these businesses and provide a great opportunity for shareholders.”
Earlier this month, AT&T revealed that HBO and HBO Max combined for 73.8 million global subscribers by the end of the fourth quarter. Thank “Sex & the City” sequel series “And Just Like That,” the third season of “Succession,” “The Matrix Resurrections” and “King Richard” for a particularly strong late push. (“Dune” was the big film in theaters in Q4, “The Many Saints of Newark” was less of a success.)
The momentum hasn’t slowed in early 2022: HBO Max’s special “Harry Potter 20th Anniversary: Return to Hogwarts” is off to the platform’s best start since the “Friends” reunion, HBO said at the time.
WarnerMedia launched its ad-supported version of HBO Max, which costs $9.99 per month, on June 2, more than a year after the commercial-free option debuted in May 2020.
AT&T is in the process of spinning off its WarnerMedia group into a partnership with Discovery, Inc. That merger is expected to close in mid 2022. The combined company will be run by longtime Discovery chief David Zaslav. The full valuation of the new organization, named Warner Bros. Discovery, has been estimated to be $130 billion.
Shares of AT&T stock (T) closed Tuesday at $26.48 per share. The U.S. stock markets reopen at 9:30 a.m. ET this morning.
AT&T executives will host a conference call at 8:30 a.m. ET/5:30 a.m. PT to discuss the company’s fourth quarter and full-year 2021 performance in greater detail.
More to come…